Does Formal Contract Farming Improve the Technical Efficiency of Livestock Farmers? A Case Study of Fattening Pig Production in Hanoi, Vietnam

Le Thi Thu Huong, Luu Van Duy (), Bui Phung Khanh Hoa, Bui Thi Nga and Nguyen Van Phuong
Additional contact information
Le Thi Thu Huong: Faculty of Accounting and Business Management, Vietnam National University of Agriculture, Hanoi 12406, Vietnam
Luu Van Duy: Faculty of Economics and Management, Vietnam National University of Agriculture, Hanoi 12406, Vietnam
Bui Phung Khanh Hoa: Hanoi Department of Agriculture and Environment, Hanoi 151100, Vietnam
Bui Thi Nga: Faculty of Tourism and Foreign Languages, Vietnam National University of Agriculture, Hanoi 12406, Vietnam
Nguyen Van Phuong: Department of Marketing, Institute of Business Administration, Vietnam National University, Hanoi 123080, Vietnam

Sustainability, 2025, vol. 17, issue 8, 1-18

Abstract: Contract farming has become a sustainable strategy in agriculture around the world. Formal farming contract in pig production is one of the priorities of the Vietnamese Government for livestock development. Due to the differences in husbandry methods, a comparison of the technical efficiency between contract and noncontract pig farms has not been studied in Vietnam yet. This study attempts to do so and proposes implications for the sustainable development of pig production in Vietnam. In this study, we surveyed 201 pig farms (63 contract farms and 138 noncontract farms) in Hanoi, Vietnam, and applied data envelopment analysis (DEA) with a meta-frontier. Under group frontiers, the technical efficiency of the contract and noncontract farms are 96.11% and 88.64%, respectively. However, the meta-technology ratios of the two groups are 82.30% and 99.99%, respectively, which means that contract farms’ technical efficiency is lower than noncontract farms. An interesting finding is that although the technical efficiency of contract farms is lower than noncontract farms, their annual pig income is significantly higher, making contract farming attractive to farmers. Results of Tobit regression models showed that land rent is one of the important factors that reduce the technical efficiency of both contract and noncontract farms. This result implies that the Vietnamese government should revise the land limit policy so that farms can own more land. Another finding is that the high feed price reduces the technical efficiency of noncontract farms. The policy implication from this finding is that the Vietnamese government should develop domestic raw material areas for feed production to lessen the dependence on imported raw materials from abroad, which contributes to reducing the feed prices in Vietnam.

Keywords: formal contract farming; data envelopment analysis; pig production; technical efficiency; livestock production (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/17/8/3557/pdf (application/pdf)
https://www.mdpi.com/2071-1050/17/8/3557/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:17:y:2025:i:8:p:3557-:d:1635311

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().